Accelerate Diagnostics Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 22, 2023

There are 9 speakers on the call.

Operator

Good morning, ladies and gentlemen, and thank you for standing by for Valvoline's Third Quarter 2023 Earnings Conference Call. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms.

Operator

Wendy Sun, Senior Director of Corporate Development and Investor Relations of Baozun. Please proceed, Wendy.

Speaker 1

Thank you, operator. Hello, everyone, and thank you for joining us today. Our Q3 2023 earnings release was distributed earlier before this call and is available on our IR website at ir. Baozheng dot com as well as on Global Newswire Services. We have also posted a PowerPoint presentation that accompanies our comments to the same IR website where they are available for download.

Speaker 1

On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer Mr. Arthur Yu, Chief Financial Officer and President of Baozun E Commerce and Ms. Sanjui Zvi, President of Baozun Brand Management. Mr.

Speaker 1

Qiu will review the business strategy and company highlights, followed by Mr. Yu, who will discuss the business development of Baozun E Commerce and about our financials, then by Mr. Zervik to share more about Baozun Management. They will all be available to answer your questions during the Q and A session that follows. Before we begin, I would like To remind you that this conference call contains forward looking statements within the meaning of the U.

Speaker 1

S. Securities Act of 1933 as amended, the U. S. Securities Exchange Act of 1934 as amended and the U. S.

Speaker 1

Private Securities Litigation Reform Act of 1995. These forward looking statements are upon management's current expectations and current market and operating conditions and relate to events that involve no risk, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward looking statements. Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U. S. Securities and Exchange Commission and its announcement.

Speaker 1

Notice our other documents published on the Web on the website of the Stock Exchange of Hong Kong Limited. All information provided in this call is as of today, year off and is based on assumptions that the company is believed to be reasonable as of this date. And the company does not undertake any obligation to Any forward looking statements except as required in the applicable call. Finally, please note that unless otherwise stated, All figures mentioned during this conference call are in RMB. In addition, we may elect to use adjusted in place of non general about financial related to the Gap brand.

Speaker 1

It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Wei Shen Qiu. Mr. Doha, please.

Speaker 2

Thank you, Wendy. Hello, everyone, and thank you all for your time. I'm happy to share with you today several key highlights from the Q3 that demonstrate solid progress in our transformation. Our total revenue grew by 5% year over year to $1,800,000,000 driven by incremental BBM contributions. BEC's revenue met our expectations driven by growth in the apparel category with a 26% year over year increase in sportswear.

Speaker 2

In addition, we further improved our operating cash flow even after accounting for cash outflow from BBN. This marks the 1st 3rd quarter since our IPO where the company has achieved positive operating cash flow. BBM is executing well on its transformation of GAAP China and has shown solid progress towards premiumization. During the quarter, DBM's gross margin of 56% continues to outpace our initial forecast. We also opened 5 new stores, garnering impressive consumer feedback and the highest sales per square meter.

Speaker 2

On my visit to the flagship store in Guangzhou, I was highly impressed with the new gap. Competing with a large array Quality apparel brands in one of China's top 10 shopping malls or stores stood out with notably higher brand for the quarter. Furthermore, following the acquisition of Gap China, Our Technology Innovation Center quickly simplified its complex architecture by consolidating nearly 70 into 1 modern integrated omnichannel operating platform, namely the Retail Operating Platform or ROP. The ROP's new architecture featuring a centralized hub instead of traditional ERP, achieves more real time management and utilize one pool of inventory to increase sales efficiency and the inventory turnover. This establishes a solid foundation for Gap's continuous digital transformation.

Speaker 2

In the next phase, our goal is to create an intelligent end to end value chain management system offering Advanced CRM and data capabilities that will significantly enhance inventory of planning and the private domain autonomy. And increasing demand for instantaneous data insights, which empowers brand in making well informed decisions. This is vital given the rapidly changing dynamics within the e commerce industry. During this year's Double 11 We introduced a suite of real time intelligence and the visualization tools. I'm proud that in such a short span of just a few months, our BI capabilities have evolved to become a leading force in the industry.

Speaker 2

Lastly, we are very excited to announce a planned 51% equity acquisition of Location or Lo Keqing, a top tier Douyin partner specializing in apparel and accessories. We are pleased about combining locations exceptional expertise in daily live streaming with our leadership in creative content, compelling portfolio of brand partners and the profound e commerce operating experiences. The synergy solidifies our leadership in Douyin Ecosystem and expands on our success in other major and E Commerce Platforms. This marks a significant milestone in our strategic transformation. Let me now pass the call over to Arthur for a review of our financials and update on our e commerce businesses.

Speaker 3

Thank you, Vincent, and hello, everyone. Let me do a quick review of the financials for the Q3 of 2023, after which I will discuss our BEC business in more detail. Once again, we are reporting 2 segments, e Commerce, which includes Baozun E Commerce, OBC, Baozun International, OBCI, and Group Headquarters and Baozun Brand Management or BBN, which includes Gap Greater China. Please turn to slide number 3. Baozun Group's total revenues for the Q1 of 2023 expanded nearly 5% to $1,800,000,000 driven by incremental BBM revenue of 290 our e commerce revenue declined to $1,500,000,000 Further pursuing a high quality business model, We stepped back on low margin product sales and trimmed low value added service revenues.

Speaker 3

Consequently, product sales of e commerce decreased by 17% year over year, notably in appliance, electronics and fast moving consumer goods categories. This was partially offset by increased sales from sports, healthcare and beauty categories. In addition, our focus on innovations enabled double digit revenue growth in technology and end to end solutions within the Tencent Mini Program Ecosystem. Our total gross profit was largely flat at RMB1.3 billion. Product sales gross Margin for e commerce and DBM was 13% and 56%, respectively.

Speaker 3

Gross margin expansion of DBM continues to outperform our initial expectations with a double digit year over year increase. Our adjusted loss from operations was of RMB90,400,000 during the quarter, of which e commerce adjusted operating loss was RMB40,300,000, mainly due to weaker medical condition and a stronger seasonality. DBM continues to show good Momentum in reduction of its operating losses to $58,100,000 this quarter. Gap's new China for China product launch, new store openings and new marketing strategies were quite successful. These initiatives will provide a foundation for better profitability in the coming quarters.

Speaker 3

Sanjrin will cover the details later. Now turn to slide number 4, about our cash and cash flow status. Cash and short term investments totaled $2,900,000,000 We continue to improve working capital efficiency through back end process reengineering on inventory, billing and cash collection management. This is the first time since our IPO that Baozun has achieved positive operating cash flow in the Q3 of the year. Now let's dive into our e commerce business.

Speaker 3

Overall, we are making good progress in transforming our BEC business. Our transformation strategy focuses on 4 key areas as follows. Number 1, adopting a Customer first approach to meet the needs of our brand partners. Number 2, enhancing the offering of our mini channel end to end services number 3, focusing on high quality and high margin businesses and number 4, boosting cost effectiveness and process efficiency. At BEC, we put our brand partners' needs at the center of everything we do.

Speaker 3

During the quarter, in collaboration with Nielsen, we further upgraded our Net Promoter Score or NPS survey and spent 2 months conducting 40 sessions of in-depth conversations with our brand partners. We seek to locate service shortfalls and identify opportunities to enhance our services. For the 3rd consecutive year, we have achieved an excellent MTS rating with 86 Net enables brands to improve operational efficiency and drive incremental business opportunity on different platforms. As demonstrated on slide number 5, 45% of our brands engaged with us on at least 2 channels, showing consistent growth compared to the same period last year. In this quarter, 40% of our total GMV was contributed from non Tmall channels, among which WeChat and Douyin delivered double digit GMV growth.

Speaker 3

Since 2019, we continue to invest in Tencent's Mini Program Ecosystem with good results. Recently, we started to pilot operations on Tencent's video account platform with brands in the FMCG and Cosmetic sectors. In the latest Tencent Smart Retail Qianyu program in October, We won 3 major awards, Global Operation Excellence Partner, Pioneer Award for Private Dongmin training and Pioneer Award for Video Account Operations. We are also very pleased with our progress in the Douyin ecosystem. Please turn to slide number 6.

Speaker 3

Since its official launch in late August, our Creative Content to Commerce or CCC has were $100,000,000 in the Q3. We have been strengthening our competitive edge within the Douyin ecosystem in luxury, sports and outdoor and fashion apparel. As announced by Vincent, we are very excited about the planned acquisition of location to create an industry leading Douyin service partner as demonstrated on slide number 7. With this partnership, We can now utilize Baozun CCC's market leadership in creative content and at to both our client partners and our own brand managed by BTM. Going forward, we will have 2 primary live streaming locations in Shanghai and Hangzhou, covering a total area of over 12,500 square meters.

Speaker 3

Lastly, we value our employees as our most important asset. Throughout this year, we initiated several talent development programs via Baozun University. We also onboarded over 300 new graduates, injecting fresh perspectives and ideas into the organization. We are proud to be consistently recognized as the best employer for 7 consecutive years. Looking ahead to the Q4, our top priority is still to help our client partner to be successful in a tough market environment this year.

Speaker 3

During this year's Double 11, we are glad that once Sandrine to elaborate more on DBM.

Speaker 4

Thank you, Vincent and Arthur, And thank you all for joining us today. It is my great pleasure to speak with you. EBM is executing well on its Transformation of Gap China, shifting from a discount driven approach to one that focuses on building consumer love for our branded products, that is the premiumization of GAAP. In the Q3, we accomplished a wide array of and increased brand marketing and visibility. Together, they lead us to wide improvement in financial metrics, including higher same store sales growth, faster inventory turnover, stronger gross margin and better than forecasted operating loss for the Q3 as demonstrated on Slide 8.

Speaker 4

Let me now provide you with additional color on our new product launches. Building upon the foundation established in the first half of the year. This Q3, we introduced our new locally designed China to China product, aiming to deliver the right product for the right people at the right time. This product line upgrade is a continuous process and critical to the apparel industry. Our new product lines feature 3 new segments, modern preppy, urban workwear and premiumblue, in addition to the traditional Gap logo segment.

Speaker 4

We launched these products with a comprehensive go to market strategy. Since the last week of September, We have elevated the Gap brand through a combination of celebrity endorsements, new store openings, new products, Boeing Superbrande Spotlight and the I'm GAAP social buzz. As of October 31, The INGAP campaign has generated over 309,000,000 impressions, while craze gap, just gap or XiongAAP Pure GAAP in Chinese, it accumulated 222,000,000 impressions across Weibo, Douyin and Xiaohongshu. We also garnered over 100,000,000 impressions during our Boeing Super Grand Day in late September. During the period, we were able to grow GMV by 7 times year over year to 56,000,000 setting a new record for self broadcasting in a single day.

Speaker 4

We also topped Boeing's flagship and men's fashion hot list during the event. This marks a significant shift from the past, where our products, marketing and channels were not managed in a fully integrated way. Consequently, with our integrated iM GAAP message, Products and channels, our new products are increasingly sold at full price and more customers are purchasing new products instead of the discounted carryover products. During the Q3, our inventory turnover days improved to 177 days, down from 220 days a year ago. In addition to the new products, we successfully opened 5 new stores during the quarter, including a flagship destination store in Guangzhou, as well as new stores in Shantou, Shenzhen and Beijing, as shown on Slide number 9.

Speaker 4

These stores emphasize a product layout that is younger and more interactive. We also showcase trendy co branded designs as well as an upgraded segmentation for men, women and kids. As Vincent mentioned, I am proud to share that our Guangzhou, Zhengtia flagship store, situated in 1 of the top 10 shopping malls in China, distinguished itself with significant higher foot traffic and an elevated brand energy. To date, the total stores have exceeded our internal expectations, and we are on schedule to open a total of 10 new stores in the 2nd half of twenty twenty three. Benefiting from our success, BBMs gross margin for the quarter reached 56 post royalty fee, marking a significant improvement of more than 10 percentage points from a year ago.

Speaker 4

Other key metrics, including traffic, conversion rates, average ticket value and sales per square meter, all demonstrate positive market feedback. Another indicator of premiumization is the positive shift of our consumer demographic. Please turn to Slide number 10, as we have prepared a demographic analysis pre and post our I'm Gas brand campaign. We have observed a significant increase in the contribution of new members who tend to be younger, have higher consumption power and prefer to purchase new products. Notably, the important 18 year to 29 year old segment has grown by 700 basis points to 42%.

Speaker 4

As of October, we have acquired more than 28,000,000 members, contributing to 77% of our sales, of which roughly 2,500,000 are active members. Clearly, we are excited about the upgraded front end of our business. Let me now talk about the progress on our back end. During the quarter, we've made rapid improvements to the local supply chain with localized capacity accounting for almost 100% local sourcing. This agile supply chain has enabled us to reduce our design to shelf lead time from the previous 3 to 6 months to just a matter of weeks.

Speaker 4

In addition, we also quickly upgraded the IT systems with the help of Baozun Technology. With the completion of Phase 1 of ROP, our retail operation platform, we are preparing for Phase where we aim to deploy Baozun's big data capabilities to develop an intelligent end to end value chain management to drive omni channel inventory and CRM efficiency. These enhancements will empower us to make more agile decisions on merchandising, marketing and inventory management. This will be a key emphasis in Gap's journey towards online merch offline growth and a major milestone for BBM at large. As you can see in the first half of twenty twenty three, we substantially upgraded Gap supply chain, significantly increased Store efficiency and strategically recruited talent for all key positions.

Speaker 4

In the 3rd quarter, we successfully launched our new locally designed China for China products, opened new stores and elevated Gap's marketing. We will continue to expand our product portfolio and open additional stores in Q4. We are confident about where GAAP is heading. Lastly, our recent acquisition of Hunter is proceeding as planned with the establishment of the joint venture of Authentic Brands Group. Given the positive momentum of the brand, We are optimistic about its development plan.

Speaker 4

We look forward to sharing more with you on our next call together. That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q and A session.

Speaker 1

Thank

Operator

Our first question comes from Alicia Yap with Citigroup. Please go ahead.

Speaker 5

Hello. Thank you. Good evening, management. Thanks for taking my questions. Congrats on the solid results.

Speaker 5

I have two questions. First is, would management able to share with us what have been the notable changes that you observed during this year's Singers Day's promotion period. For example, the consumer consumption patterns, how brands' promotional efforts and even some of these large e commerce Strategy, anything that you noticed a big change this year? And also, the marketing campaigns that you helped out the brands to execute is effective in driving the intended sales or getting the GMV or the results that the brands won, any positive or negative surprise that you see that you're able to share with us? For example, any brands that particularly has a standout in their GMV or even the new user growth or anything, anything that you can see on positive or negative that you can share?

Speaker 5

And then very quickly on second question, is any preliminary view that management can share how next show 2024 the growth rate that Baozun can achieve? Thank you.

Speaker 3

Thank you, Alicia. It's a long question. Let me try to share some of the observation for this year's Double 11. So first, I think the overall traffic in the traditional platform like Pmall and JD is lower than the previous years. But on the other hand, there are more traffic shifting to the social media and content based platform such as Douyin.

Speaker 3

So That's number 1. Number 2 is we have seen increased competition among different e commerce platform offering better price transparency with a better overall customer experience like how Return to goods, how quickly the product can be delivered. So that's a key observation. And then from a brand perspective, this leads to a record high cancel and return rate for all platforms, which causing the issues and causing the financial impact to the brands. What Bozhun has been helping the brands are The first one is, during and before and during the Double 11 campaign, we helped the brand to create an overall strategy for all channels.

Speaker 3

So that helps the brands to know what They do for the different channels at the different periods of the promotion. And secondly, given our capability to Our end to end service, including operation customer service and logistics and warehouse, we can link all the service together Using our system capability to provide a better overall customer experience and also helping the brand to create a better efficiency. For example, during the Double 11, the cancel rate has been high and return rate has been high. With our system capability, we are able to very quickly release the canceled item back to the shelf, allowing the brands to sell the product without losing the opportunity during the Double 11. And finally, it's our support to the brand on the good data insights, which helping the brand to make real time Change and shift on the different phase of the campaign, helping them to achieve a better result.

Speaker 3

So overall, I think We have made and for some brand exceed our own goals internally. But From a financial perspective, because of the high return and cancel rate, we are waiting to see how much impact that will have on us. In regarding to your second question in terms of the next year, given the foundation we laid out on e commerce for this year, We believe we will have a positive growth both top line and bottom line for the next year. We are in the

Speaker 6

Thank you.

Speaker 3

Thank you, Alicia.

Operator

Our next question comes from Thomas Chong with Jefferies. Please go ahead.

Speaker 7

Hi, good evening. Thanks management for taking my questions. My first question is relating to GAAP. Can management comments about the strategies and investments that we should expect over the next few years? And in particular, how we should think about the revenue scale and the timing to achieve breakeven.

Speaker 7

And my second question with respect to the e commerce Business in the domestic about the omni channel strategies. Can management comments about the future mix for Tmall and the non Tmall channel. Thank you.

Speaker 3

Okay. Thank you. Maybe, Sanjay, you can go for the first one and we'll cover the second one.

Speaker 4

Okay. Sure. Okay. Thank you, Jeffries, for your question. So in terms of strategy, we're going to pursue what is at the heart of BBM.

Speaker 4

At the heart of BBM is really China for China and technology empowerment. So we are already on a good track on these 2, but we are continuing. And in the case specific case of GAAP, we will also pursue the premiumization trends that we have engaged in, thanks to our control of supply chain and to our absolute control of discount. So this will continue with more to come in terms of products, more to come in terms of Opening new stores, as you noticed, we started to open 5 new stores in the Q3. We have another 5 planned in the next quarter and this trend will continue over time and in 2024 and beyond.

Speaker 4

And we are confident that we can actually stick to our initial plan, which was to significantly reduce the loss this year, further half it next year and be breakeven in 2025?

Speaker 3

Thank you, Sanjuri. On the second question regarding domestic and international brands, so basically Our observation is in the recent years, the domestic brand has captured more market share in the middle to low With a better overall brand attractiveness and better overall customer experience and more product innovation and introduction. For Bozun, we see opportunity in both the international and domestic brand partners. For the international brands, They would like Fodun to play a role as a strategic partner, offering them an end to end one stop solution, including help them to She's to design a strategy for the overall China e commerce and then help them to execute. So this is something Bowdrin is very uniquely positioned to provide.

Speaker 3

For domestic brands, given they are close to China, Some of the operations, they normally do in house, but they come to Bowdoin asking for help on the value added service, such as Digital Marketing, the Warehouse Management and Technology. So with the China eHOME system becoming more and more to specialize in each of the services, we believe we have opportunity in both

Speaker 1

Okay. Operator, maybe next one please.

Speaker 4

Yes. Our next question comes from Sophie Huang with CMBI. Please go ahead. Okay.

Speaker 6

Thank you. Thank you for taking my question. I have two questions here. Number 1 is regarding the Hangzhou location aggregation. So what is the rationale of location and position?

Speaker 6

And how do we look at the business synergy in the live streaming e commerce segment and the financial impact And the second question is regarding our live streaming e commerce update. We have made progress in the ecosystem For brands, can you help us to understand the ROI difference between Douyin channel and the Tmall channel And how to improve it? I remember you mentioned that luxury brands performed well in Douyin ecosystem. And what about other categories? Thank you.

Speaker 3

Okay. Thank you for the question. We believe the overall trend for The e commerce in China is will have more social and content based e commerce. So that's the And based on that view, we think the capability to produce high quality live Streaming and content is a must to have in the upcoming year. So based on that rationale, we searched With a very deep experience and know how on how to run the live streaming in both the Tmall and store in platforms.

Speaker 3

And also after our initial working waste location, so a well run business with a healthy profit margin and talented core teams. So we believe the combination between Baozun and location We will be able to utilize the good system and infrastructure of Baozun, the very deep relationship and all mini channel streaming operations capability and also their Hangzhou facility. Within combining those 2, we'll be able to make us one of the best Creative content and live streaming service provider in China. And we think this capability will help us to provide the value added service for our high end brands. The second question about ROI.

Speaker 3

We think The ROI for both the Douyin channel and Tmall channel is currently under are currently under the pressures. So that's because for both The Douyin and Tmall, we need to know in terms of how to define a successful strategy to improve ROI. So If we think from the brand perspective, how to differentiate the merchandising strategy, how How to do the digital marketing in those 2 different platforms will determine how good our ROI is about. So that's why we think offering a good capability and working closely with the brand will be able to improve the ROI for both brands. So in those two platforms, you will be able to improve the ROI if you do a very good operations.

Operator

Our next question comes from Colin Chan with Citi Securities. Please go ahead.

Speaker 8

Good evening, management. Thanks for taking my question and congrats on the solid results this quarter. I have two questions about BBM. The first question is about GAAP. It has been around 3 quarters after the acquisition of GAAP China.

Speaker 8

And looking back on the past quarters, What operation results are beyond your expectation and what are below your expectation? And the second question is also about GAAP. How to evaluate the improvement of GAAP results and what are the key metrics to follow other than the gross profit margin? And when we're talking about the to To maintain the price of gas and but in China, Especially in this year, people are talking about the consumption downgrade. So what's your observation when you are doing this kind of improvements of GAAP.

Speaker 8

That's all. Thank you.

Speaker 4

Okay. Thank you for your question, Collin. So first, after 3 quarters, not exactly 3 quarters, because actually we took over in 1st February, We can say that most of the operational results exceed our margin exceed our expectations, particularly when all the indicators that point to better attraction of the brand, which means primarily obviously gross margin that we discussed earlier, which has increased much more significantly than we even expected. But also the inventory turnover that has been also a very, very strong improvement. At the same time, by saying this, I'm showing you some metrics that we consider as very important.

Speaker 4

The inventory turnover, the same store sales growth, the conversion rates, These are all metrics that we look very carefully at because at the end of the day, this indicates if the brand is attractive for a consumer or not. If a consumer comes to a shop and buy a brand only because it's discounted, it's actually not a good sign. So from the beginning, we've been extremely attentive to these metrics because this is actually how to get back on track to be a positive brand, a brand that attracts consumers. And on all these matters, we are actually quite satisfied and it's usually beyond expectation. Now where it's a little bit slower is on the online part of the business, where obviously it takes longer time to achieve this with consumers, all the more so as we used to be Gap used to be very much a Tmall online business.

Speaker 4

And we saw, as mentioned by Arthur, a lower traffic in general on Chemo and JD and this obviously has also been a negative factor for our online business. So that's to answer the first part of your question. Now answering the second part of your question, obviously, we do pay attention to our top line, but our top line, we prefer to look at it primarily in same store sales and same channel sales to see the progress. Then gross margin is fundamental. Without a proper gross margin, you actually cannot do anything.

Speaker 4

We also if I stick Financial metrics, inventory management and inventory days of turnover, very important as well because this is a precondition for the gross margin to remain healthy and control obviously of costs. And on all this, we are quite Happy with what has happened so far and these are the metrics we will continue to look at going forward. Now to answer the 3rd part of your question, Although we have premiumized GAAP, we haven't turned it into a luxury brand by far. What we've done really is to make sure that more a larger percentage of products are sold at full price instead as being fully discounted from the 1st day. And I think that even in the current Circumstances of a slower economy, we can see that this is a winning strategy.

Speaker 4

And in fact, I would say that the consumers today are not so much chasing bargains, but they are really looking for value for money. And value for money is not just Question of money, it's also a question of value. And what we can see is that if we give consumers at a reasonable price, a price that reflects the value in the product, the product he or she wants With the quality he or she expects the design he or she expects, then this is what they consider to be value for money and this works. That's about the way I would answer your 3 parts of questions.

Speaker 8

Very clear. Thank you very much.

Operator

Our next question comes from Jack Hu with Allheart Securities. Please go ahead.

Speaker 7

Hi, good evening, management. Thanks for taking my question. I have a small question regarding M and A strategy. We have seen some progress on GAAP business after our acquisition. So could management share some thinking on the and then a strategy going forward?

Speaker 7

Thank you.

Speaker 2

Okay. Thank you, Jack. This is Vincent. I will answer his question. And then Sanju, maybe you want to add some comments off that.

Speaker 2

Yes. For the M and A strategy, I think we have 2 parts and one important consideration. One part is about the BBM. I think for the BBM M and A for potential brands, number 1 is that we I think right now GAAP Hunter is very important for us. So the first thing we need to do is start to make GAAP turnaround, a successful one.

Speaker 2

And to have GAAP and Hunter With all the potentials we have to turn this to a very positive opportunity for us, that is number 1. Number 2 is that we'll still be very active in exploring potential brands, but we will be very selective Very effective for brands. The brand and the opportunity has to be good and then Has synergy meet our criteria? So it will be a very selective way for us to For BEC, we are acquiring necessary capabilities from Other companies or vendors, just like location we just have done. So in this direction, I think we will be also very selective.

Speaker 2

And I think right now most of the capabilities of Baozun are very strong. We're strong enough in different aspects. So I think maybe only for those very selective opportunities we consider to acquire in the future. So overall, I think the one principle for us which is very important is synergy. No to the existing business, no matter it's a branded business or it is e commerce business.

Speaker 2

So, that is the overall strategy for M and A. So, Cindy, you want to add something?

Operator

No, I

Speaker 4

think I may just say that, yes, of course, we want to, number 1, prove the turnaround of the brand, specifically GAAP. Number 2, we really want to be very selective and also to be true to our key criteria, which is of China for China and Technology Empowerment. So we want to really select brands where these two drivers will make a huge difference.

Operator

This concludes our question and answer session. I would like to turn the conference back over.

Speaker 1

I could actually just see comments back on the queue, maybe the last one, please.

Operator

So it looks like we have a rejoinder here. We will now take a question from Thomas Chong with Jefferies. Please go ahead.

Speaker 7

Hi, good evening. So may I ask a quick follow-up question? I think it's more relating to the trend for our Can management comment about how we should think about it in the near term and the long term? Thank you.

Speaker 3

Okay. Thank you, Thomas. I will take this one. In terms of the take rates for the e commerce Services, what we observe is some of the basic services like the store operations, the customer service, The take rate is under pressure and has a trend to reduce. Our A reaction to that is we want to improve our internal efficiency through the economy of To make sure we keep competitive in terms of the price we offer to counter the impact of At the same time, we see the take rate for the value added service has been really For some really high quality service, we see the take rate is really firm.

Speaker 3

So that's why We shifted a lot of our efforts into creating a good quality, higher value added service in our BEC kind of the service offerings. And as a lot, we think from this year, we started to do Sales business, we will be able to positively contribute to the gross margin and also to the net profit The fact of our high pressure on the take rate.

Speaker 7

Got it. Thank you.

Speaker 3

Thank you.

Operator

This now concludes our question and answer session. I would like to turn the conference back over to Wendy Chen for any closing remarks.

Speaker 1

Thank you, operator. On behalf of the Baozun management team, We'd like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Accelerate Diagnostics Q3 2023
00:00 / 00:00